When I reviewed my portfolio at the end of 2007 – I noticed that the companies, which banked on domestic Indian growth – outperformed the companies that banked on export led growth.
During 2008 – I bet on consumption led growth and accumulated such stocks.  I do not see the trend changing any time in the coming year also.
United States is the major export market for most Indian companies, and it doesn’t look like we will see a revival in the US any time soon.
Indian companies and consumers have been impacted by the global slowdown, but, the impact is not big enough to reverse the virtuous consumption cycle – that was triggered in the country, about a decade ago.
If anything, this consumption cycle will prove to be a boon for technology companies of the developed world. Companies like Microsoft, which are trading at all time lows, and have plenty of cash reserves – are the prime candidates to benefit from the domestic consumption in India, and other Asian economies.
Time to Accumulate Commodities
Commodities like oil, steel, iron ore, copper and gold are trading at prices that are much lower than the median prices of the last decade or so.
Recessionary fears have depressed commodities prices quite a bit – and the demand is expected to stagnate in 2009. The thing about commodities is that – they don’t have good substitutes. You need steel to do what steel does, and you need oil to do what oil does.
So when the economic cycle turns, and demand starts to pick up – commodities will be at the forefront of that rally. No one can predict when that will happen: but it is bound to happen sooner or later.
Conclusion
In a nutshell, in addition to the consumption led stocks that I had last year – I will add commodities and technology companies from the developed world.
Note: I am not a financial adviser and these are just my own investment opinions – not – buy recommendation for others.
